IEEE Releases First Study of Blockchain Adoption in the Pharmaceutical Industry

Oct 18, 2017
Volume 12, Issue 11

Blockchain, the digital ledger system that supports the digital currency, bitcoin, is being adapted and evaluated for use in a number of applications and industries, including banking and financial services. Efforts to use blockchain and technologies that it enables, such as smart contracts, in pharma are at an earlier stage, but there is a growing recognition that the decentralized platform could offer benefits, allowing supply chain partners to share and verify data in a secure IT environment that is difficult to hack into. Blockchain also allows users to choose the level of data anonymity they want to grant partners, depending on their strategic importance, and how important the data are to their supply-chain roles.

It comes as no surprise that electrical and electronics engineers, who would be crucial in developing blockchain solutions, are also studying its use in various industries and examining its potential in pharma and healthcare closely. On Oct. 17, 2017, the Institute of Electrical and Electronics Engineers (IEEE) Standards Association disclosed that it had completed and would release its first benchmarking report, The State of Blockchain Adoption in the Pharmaceutical Supply Chain, for purchase in October 2017.

IEEE’s research into pharma’s experience with blockchain, which began at a forum that the Institute held at Johns Hopkins University in June 2017, reflects insights from 300 executives, including pharmaceutical manufacturers, distributors, and retail pharmacies and dispensaries, based on their concerns about and opinions of the technology.

The study aims to explore whether blockchain could help manufacturers, distributors, and dispensaries meet the serialization guidelines established by the US Drug Supply Chain Security Act (DSCSA) of 2013. But, on a broader level, its goal is to identify gaps and barriers to pharma’s adoption of blockchain by asking project leaders at pharmaceutical companies who are actively evaluating the technology a number of fundamental questions that forum attendees had first identified four months ago, including:

  • who should pay for blockchain implementation

  • who should own the data that result from implementation

  • how support for implementation might best be gained from key users and decision-makers

  • whether a private or a public blockchain model would work best for pharma’s complex global supply chain.

Blockchain solutions, IEEE writes in its Executive Summary of the study, would help address pharma’s fragmented and siloed-data access problem, which can hamper effective collaboration and harmonization with multiple trading partners and regulators, since all partners in the pharma supply chain share responsibility for making it work and keeping it safe.

Two immediate motivators for adopting blockchain, according to IEEE, are the explosive global growth of counterfeit medicines, as well as the pharmaceutical industry’s lack of supply chain transparency, which often leaves it unable to anticipate drug shortages or recalls.

As IEEE writes, in a digitized world, policy changes alone are not enough to effect improvements in supply chain management, and today’s legacy platforms are ill-equipped to operate in an economy that relies on data sharing.

Of the 300 respondents to IEEE’s online study, which was independently administered and managed by Ipsos, most executives said that they are actively exploring use of blockchain in their supply operations.  Some have advanced these efforts to the proof-of-concept stage, while roughly 20% are currently involved in a pilot study of the technology.

IEEE saw a direct correlation between an individual’s familiarity with the technology and their company’s participation or level of investment in it. Respondents from all segments of the supply chain said that they viewed blockchain as useful, efficient, valuable and secure, noting that use of blockchains would help them comply with DSCSA requirements.

As far as top barriers to adoption, wholesalers and dispensary executives saw the main obstacles as lack of user buy-in, the typical challenges that result from implementing any new technology, and the need to connect to all networks.  Manufacturers saw cost, security and network connectivity and integration as top concerns.

All three groups cited regulatory uncertainty and the need to understand how FDA would define the compliant use of blockchain, as well as visibility of the data and trust, given their supply chain partners’ ability to view company information in an autonomous system.

In response to questions about who should pay for and own blockchain implementations, most respondents suggest that pharmaceutical manufacturers should be responsible for implementing blockchain and believe that they should also own the data that would be placed in that blockchain.  However, roughly one third of respondents support the idea of shared implementation, in which all trading partners equally benefit, and contribute to implementation.

Most respondents who are already evaluating blockchain say that they are extremely likely to progress to the next step of study or implementation, confirming IEEE’s observation of a direct correlation between a respondent’s level of familiarity with the technology and his or her enthusiasm for more work in the field.

Now that barriers are better understood, IEEE is developing a strategic plan that includes standards development, as well as education and awareness programs, to allow the industry to move closer to adopting the technology.  IEEE concluded there is a need for more education about blockchain, and, more generally, a better understanding of what “trust” means on an autonomous platform.

As a first step to address the need for greater understanding and awareness of the challenges and promise posed by blockchain, IEEE will be holding a workshop in Washington DC on Nov. 8, 2017, at the Eighth Annual Healthcare Distribution Alliance Traceability Seminar, called “Cutting to the Trace with Blockchain.” IEEE also seeks to develop standards that would be developed and approved through group consensus by a hybrid of technologists, executives, regulators, and academics, to certify that blockchain would be a credible solution for industry applications. 

Source: IEEE, Executive Summary, October 2017, State of Blockchain Adoption in the Pharmaceutical Supply Chain, Industry Study

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